I just finished reading Nassim Nicholas Taleb’s book The Black Swan (The Impact of the Highly Improbable). Published in 2007 he talks about the risks banks and financial institutions are taking and predicts a major collapse of the system. In this book, I found many of my intuitive views about economics confirmed.

From Aristotle to the Renaissance, astronomy was based on the geocentric view of the universe. Countless astronomers and mathematicians were busy adjusting their formulas to new observations. Artists spent years building and rebuilding Armillary Spheres representing these formulas; but no matter how hard they tried, they were never able to exactly reproduce the observations in the sky. The problem was not their skills but the fact that the earth was in the centre of their models. Once it was recognized that the universe is heliocentric the discrepancies between the models and the observations could be explained and the armillary spheres became beautiful examples of sophisticated craftsmanship.

Why do I bring armillary spheres up? Because I believe that today’s science of economics, based on diligent attempts to put observations into mathematic formulas, has its basic assumptions wrong. For example, is the theorem that recessions are cyclic just based on observation or is there a deeper reason? To what degree is this theorem self-fulfilling prophecy? I also wonder about the influence of the tight relationship between the economics academia and the executive levels of the economy. Is this another case of “don’t bite the hand that feeds you”? Is GDP accurate enough to describe the economic wellbeing of a nation?

I am convinced that we have to change the basic assumptions of economics to get a handle on the ever increasing problems of society (e.g. environment, income disparity, etc.). Unfortunately, there was no equivalent of an Armillary Sphere ever built, so future generations have nothing to marvel at.